Confocal imaging and fluorescence correlation spectroscopy (FCS) was applied towards characterization of lipid phase behavior and diffusion measurements in model lipid membranes. Giant unilamellar vesicles (GUVs) of defined lipid composition were first imaged by confocal fluorescence microscopy. Phase separation was visualized by partitioning of fluorescent lipid analogs with different fatty acid chain lengths into the coexisting phases. Cholesterol induces a marked change in the shapes of the phase domains for the binary mixture of DLPC1/DPPC. Characterization of the dynamics by measuring diffusion coefficients by FCS was carried out in liquid disordered (L__, liquid ordered (Lo) and gel phase (L__. The two-phase region for the binary mixture DLPC/DPPC (L_/L_) was identified by dual mode dynamics recognized in the shapes of the FCS autocorrelation curves. For binary mixtures of DLPC/cholesterol and DMPC/cholesterol, a continuous gradual transition of diffusion coefficients from high values (3.9 x 10-8 cm2/s) in the pure phospholipid down to tenfold slower diffusion as cholesterol was increased up to the phase boundary at 67 mol%.